Page 214 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes organisations. Most centre on the idea that an organisation must create a culture that
encourages ethical behaviour. Society expects organisations to maintain ethical
behaviour both internally and in relationship with other organisations. Ethical
behaviour is expected in relationships with customers, environment and society.
These expectations may be informal or they may come in the form of increased legal
requirements.
These challenges are forces that place pressures to change on organisations. Organisations
cannot afford to be rigid and inflexible in the wake of environmental pressures, rather
they must be dynamic and viable so that they survive.

Example: For Tata Iron and Steel Company, foreign investors (suppliers of capital) are
a new force for change. In the past, Tata emphasized the creation of jobs in its community of
Jamshedpur, a city in eastern India. Tata’s 78,000 workers receive lifetime employment, along
with free housing, education and medical care. The company, in turn has benefited from a
complete lack of strikes in 60 years. But investors interested in Tata have asked how the company
might improve its profit margin of only 3.7 percent. (Note: Tata’s managing director Jamshed
Irani, “We will now be forced to balance loyalty against productivity).
2. Internal Forces: Besides reacting to or anticipating changes on the outside, an organisation
may change because someone on the inside thinks a new way of doing things will be
beneficial or even necessary. Pressures for change that originate inside the organisation
are generally recognizable in the form of signals indicating that something needs to be
altered. These internal forces are discussed below:

(a) Changes in Managerial Personnel: One of the most frequent reasons for major changes
in an organisation is the change of executives at the top. No two managers have the
same styles, skills or managerial philosophies. Managerial behaviour is always
selective so that a newly appointed manager might favour different organisational
design, objectives procedures and policies than a predecessor. Changes in the
managerial personnel are thus a constant pressure for change.
(b) Declining Effectiveness: Declining effectiveness is a pressure to change. A company
that experiences losses is undoubtedly motivated to do something about it. Some
companies react by instituting layoffs and massive cost cutting programmes, whereas
others view the loss as symptomatic of an underlying problem, and seek out the
cause of the problem.

(c) Changes in work climate: Changes in the work climate at an organisation can also
stimulate change. A workforce that seems lethargic, unmotivated, and dissatisfied
is a symptom that must be addressed. This symptom is common in organisations
that have experienced layoffs. Workers who have escaped a layoff may find it hard
to continue to be productive. They may fear that they will be laid off as well and
may feel insecure in their jobs.
(d) Deficiencies in the Existing System: Another internal pressure for organisational change
is the loopholes in the system. These loopholes may be unmanageable spans of
control, lack of coordination between departments, lack of uniformity in politics,
non-cooperation between line and staff etc.
(e) Crisis: A crisis also may stimulate change in an organisation; strikes or walkouts
may lead management to change the wage structure. The resignation of a key decision
maker is one crisis that causes the company to rethink the composition of its
management team and its role in the organisation.

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